DWP Introduces New Measures to Crack Down on Benefit Fraud

The Department for Work and Pensions (DWP) has announced the schedule for the introduction of new bank checks on benefit claimants as part of efforts to reduce fraudulent claims. These measures are in response to a significant loss of £8.3 billion to fraud and error in the welfare system during the 2022/2023 fiscal year, with the majority of losses attributed to fraudulent claims.

According to reports, the DWP made payments of £894 million to Universal Credit recipients who had not disclosed receiving excess funds, thereby rendering them ineligible for benefits. To address this, the DWP has implemented a savings limit of £16,000 for recipients of various benefits, including Universal Credit, income-based Jobseeker’s Allowance, income-related Employment and Support Allowance, Housing Benefit, and Income Support. If a claimant’s savings exceed this threshold, their benefit claims will be suspended, and initial approval will be dependent on the individual not exceeding the savings limit at the time of application.

Currently, the DWP can only request to access a claimant’s bank account if fraud is suspected, and it relies on claimants to report any changes in their circumstances that may affect their eligibility for benefits. However, new proposals in the Data Protection and Digital Information Bill could soon require banks and building societies to share data with the DWP on accounts where benefits are deposited.

Under these provisions, banks would be mandated to automatically check claimants’ accounts for signs of potential fraud, such as excessive savings or evidence indicating that a claimant is residing abroad for an extended period without reporting it. The goal is to prevent fraudsters from evading detection by transferring their funds between accounts.

The DWP plans to pilot the new measures in 2025, with a full-scale rollout scheduled to commence in 2027 and be completed by 2031. This phased approach is intended to facilitate a period of ‘test and learn’, beginning with a limited number of banks and building societies to finalize the data-sharing agreements between the DWP and third-party data holders before expanding the policy.

According to government reports, the expected savings from these measures are projected to mainly come from the detection of capital and abroad fraud. Capital fraud, which involves concealing excess funds to claim benefits, is estimated to account for the majority of the projected savings, amounting to £3.1 billion out of the total £3.6 billion.

Overall, the DWP’s efforts to strengthen oversight and prevent fraudulent benefit claims aim to ensure the integrity of the welfare system and effectively support those in genuine need of assistance.